02-1160

Income Tax

Signed 2/14/03

 

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

 

PETITIONER, ) ORDER

)

Petitioner, ) Appeal No. 02-1160

)

v. ) Account No. #####

)

AUDITING DIVISION ) Tax Type: Income Tax

OF THE UTAH STATE TAX )

COMMISSION, ) Tax Year: 1998

)

Respondent. ) Judge: Davis

_____________________________________

 

Presiding:

G. Blaine Davis, Administrative Law Judge

Appearances:

For Petitioner: PETITIONER REP, CPA

For Respondent: Mr. Laron Lind, Assistant Attorney General

Mr. Brent Taylor, from the Auditing Division

 

 

STATEMENT OF THE CASE

This matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. '59-1-502.5, on January 23, 2003.

When Petitioner filed his 1998 Resident Individual Income Tax Return, he deducted an amount of $$$$ on line 18 as an equitable adjustment. The equitable adjustment was for income which was earned in the STATE by Petitioner.

Respondent audited the return of Petitioner and made an adjustment removing the $$$$$ deduction, and requiring Petitioner to pay taxes on that amount as Utah income.

It is the position of Petitioner and his CPA that the income was not earned in Utah and is therefore not taxable in Utah, and that the only way to remove it is by making an equitable adjustment.

The position of Respondent is that Petitioner is domiciled in the State of Utah, and therefore all of his income, wherever earned, must be included on his return, and then if he pays income taxes to another state, he is entitled to claim as a credit against the Utah tax, the amount paid to another state up to the maximum rate that would have been paid in Utah on that amount.

APPLICABLE LAW

Utah Code Ann. 59-10-104 imposes an income tax "on the state taxable income, as defined in 59-10-111 and 59-10-112, of every resident individual. . . ."

Pursuant to Utah Code Ann. 59-10-112, "'state taxable income' in the case of a resident individual means his federal taxable income (as defined by section 59-10-111) with the modifications, subtractions, and adjustments provided in Section 59-10-114. . . ."

Utah Code Ann. 59-10-111 provides that, "'federal taxable income' means taxable income as currently defined in Section 63, Internal Revenue Code of 1986."

DISCUSSION

In this matter, Petitioner is domiciled in the State of Utah. Therefore, his income required to be included on his return includes everything that was on his federal income tax return. Petitioner is not entitled to deduct income earned in another state, but if he pays taxes to another state, then he may deduct as a credit the amount of taxes paid to such other state up to the rate of taxes imposed by the State of Utah on the same income. There is no evidence that Petitioner paid any income taxes to another state on the income which he deducted on line 18.

DECISION AND ORDER

Based upon the foregoing, the Commission determines that the audit assessment made by Respondent should be sustained, and the Petition for Redetermination is hereby denied. It is so ordered.

This decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request within thirty (30) days of the date of this decision to proceed to a Formal Hearing. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:

Utah State Tax Commission

Appeals Division

210 North 1950 West

Salt Lake City, Utah 84134

Failure to request a Formal Hearing will preclude any further appeal rights in this matter.

DATED this 14th day of February , 2003.

 

 

____________________________________

G. Blaine Davis

Administrative Law Judge

 

 

BY ORDER OF THE UTAH STATE TAX COMMISSION.

The Commission has reviewed this case and the undersigned concur in this decision.

DATED this 14th day of February , 2003.

 

 

 

 

Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner

 

 

 

 

Palmer DePaulis Marc B. Johnson

Commissioner Commissioner